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Eureka Forbes Limited

""

Directors
Siiapoor P. Mistry
K.C.Mehra
S.LGoklaney
D.E.Udwadia
J.C.Chopra
N.D.Khurody
C.G.Shah

Chairman
- Vice Chairman
Managing Director

Principal Bankers
State Bank of India
Catyon Bank
The Bank of Nova Scotia
BMP Paribas
UTI Bank Ltd.
Solicitors and Advocates
Udwadia & Udeshi
Auditors
Batliboi and Purohit
Corporate Head Office
Konkan Co-op Hsg. Soc. Ltd.,
Konkan Nagar Hall, Ground Floor
Plot No. 123, Lt.P.K.marg
Mahim (West), Mumbai - 400 016
Registered Office
7, Chakraberia Road (South),
Kolkata - 700 025.

F r

Company Secretary

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REPORT OF THE DIRECTORS OF EUREKA FORBES LIMITED

To,

The Members,
The Directors are pleased to submit their Report-arid the Audited Accounts of the
Company for the year ended 31st March, 2005.
1. FINANCIAL RESULTS :

Sales and Other Income

Profit before Depreciation
Less : Depreciation
Profit before Tax
Less : Provision for Taxation (Net)
Profit After Tax
Less: Prior Year's Tax Adjustments (Net)
Profit After Tax and prior years' Adjustments
Add : Balance brought forward from
Previous year
Amount available for appropriation
APPROPRIATIONS :
Interim Dividend
Tax on Dividend
Transferred to General Reserve
Balance carried to Balance Sheet
2.

Current Year
Rupees
5,50,24,35,405
38,14,49,368
6,00,52,303
32,13,97,065
9,36,05,722
22,77,91,343
20,05,927
22,57,85,416
20,88,09,940

Previous Year
Rupees
4,92,16,32,761
31,76,59,860
5,63,43,485
26,13,16,375
6,60,53,005
19,52,63,370

43,45,95,356

39,04,94,315

24,75,00,000
3,23,45,200
5,00,00,000
10,47,50,156

9,90,00,000
1,26,84,375
7,00,00,000
20,88,09,940

19,52,63,370
19,52,30,945

DIVIDEND :
Your Company has shown growth in turnover and profitability in the year under review
and has paid an interim dividend of Rs.50/- per share (500% on face value of Rs.10/each) amounting to Rs.24.75 Crores (previous year Rs.20/- per share i.e. 200% on
face value of Rs. 10/- per share amounting to Rs.9.90 Crores). The Directors consider
that the interim dividend of Rs 507- per share declared and paid to be commensurate
with the results for the year ended 31st March 2005 and do not recommend a final
dividend for the year 2004-05 (previous year NIL) .

3.

OPERATIONS :
Your Company crossed a landmark turnover of Rs.500 Crores, recording a healthy
growth of 12% over previous year. The Profit Before Tax has grown by 23% from
Rs.26.13 Crores to Rs.32.14 Crores whereas the Profit After Tax for the year has
grown by 17%, from Rs. 19.53 Crores to Rs.22.78 Crores.
'
Your Company made this achievement possible by nurturing some of the new
initiatives taken in the previous year for both existing^aod. new ventures.
For Eureka Forbes Limited
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Some of the new initiatives in existing business includes benefits derived from
regionalized Central Recruitment and Training Centres, increasing the reach to the
customers by introducing van operations called "Customer Care Units" in selected
areas and its expansion to other centers of operation. This led to improved
productivity and leadership development for the future.
Your Company's range of water purifiers - Aquaguard, Forbes and Aquasure were
certified by the Indian Medical Association. These are the only water purifiers certified
by this acclaimed organization.
During the year under review your Company took an unprecedented but bold step to
exit from its new initiative of Home Stores, a retail chain of stores for white goods and
other consumer appliances and durables, in 'B' and 'C' towns. This was primarily
done to concentrate on Company's core activities and conserve and invest its
resources in Company's core line of business.
The Company's Forbes Aquasure brand of low cost high quality water purifiers
affordable to rural and semi-urban middle class customers is gaining momentum and
is expected to become a household name in this segment.
Some of the new initiatives which the Company has undertaken are in the areas of
increasing its width and depth of customer database through its new Division, "Euro
Connect" Direct marketing, and also opened India's first knowledge center on drinking
water quality called "Water X".
Your Company continues to follow the policy of maintaining sufficient cash balances
to fund internal investments in developing infrastructure, enhancing productivity
through information technology using "SAP," development of new products through
R&D and for contingencies in business. The initiative to introduce SAP in your
company is a major decision to drive business in an effective and efficient manner
with least human interventions.
Your company's ranking in the Hewitt Associates Best Employers' awards improved
from 18th to 16th rank through various employee oriented initiatives and systems.
Your Company continued its social responsibility by sponsoring Euro Parivaar Park in
Mumbai with particular focus on Rainwater Harvesting, actively contributed and
participated in Tsunami Relief measures in the affected parts of South India which
was acknowledged widely in mass media and conducted Euro Enviro Quiz
Programme involving 1,50,000 children from various schools in different parts of India
making it into a stature of national event.
Your Directors are confident that, barring unforeseen circumstances, the Company
will improve upon its performance in the ensuing year with a promise to "Target
Tomorrow's Customers Today".

For Eureka Forbes Limited

Secretary
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SHAREHOLDING PATTERN
During the year under review, there was a change in the shareholding pattern of the
Company. On 4th January, 2005 Forbes Gokak Ltd., alongwith its subsidiary
company, Forbes Finance Ltd. acquired 40% share capital in the Company when
Electrolux AB, Sweden, divested its 40% shareholding from the Company. In so doing
Forbes Gokak Ltd. alongwith its subsidiary company Forbes Finance Ltd. own 100%
share capital of the Company. Your Directors take this opportunity to thank Electrolux
and all its Directors who were on the Company's Board from time to time for all the
suggestions, guidance and active participation in the deliberations of the Board
Meetings from the very inception which enabled this Company to move forward from
strength to strength and to a position of what it is today. While there is financial
disengagement from the Company, your Directors promise to maintain a harmonious
business relationship with Electrolux in the areas of new product developments,
opening up of new markets and new opportunities.
During the year, the Company in accordance with the decision at the Extra-Ordinary
General Meeting held on 4th March, 2005 announced first Buy-Back of 6,90,000 fully
paid up Equity Shares.
The offer for buy back of 6,90,000 Equity Shares of Rs.10/- each at an average price
of Rs.215/- per equity share for an aggregate consideration of Rs.14,83,50,000/- was
kept open during the period between 16th March, 2005 to 15th April, 2005.
Your Company bought back the said shares at said aggregate consideration on 15th
April, 2005. Consequently, the total paid up capital of your Company as on 15th April,
2005 stands reduced to Rs.4,26,00,000/-.
5.

DIRECTORATE:
Mr. Magnus Yngen resigned from the Board effective 4th January, 2005. The Board
placed on record their sincere appreciation of the services rendered to the Company
by Mr. Magnus Yngen during the tenure as the Director of the Company.
Dr. Suresh Balan resigned from the Board effective 4th January, 2005. The Board
placed on record their sincere appreciation of the services rendered to the Company
by Dr. Suresh Balan during the tenure as the Director of the Company.
Mr. Ashok Barat resigned from the Board effective 4th January, 2005. The Board
placed on record their sincere appreciation of the services rendered to the Company
by Mr. Ashok Barat during the tenure as the Director of the Company.
Mr. Knut Stangenberg (Alternate Director to Mr. Magnus Yngen) resigned from the
Board effective 4th January, 2005. The Board placed on record their sincere
appreciation of the services rendered to the Company by Mr. Knut Stangenberg
during the tenure as the Director of the Company.
Mr. N. D. Khurody and Mr. C. G. Shah retire by rotationjand being eligible offer
themselves for reappointment.
Forbes Limited
Secretary

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6.

SUBSIDIARY COMPANIES :
During the year under review, the Company's wholly owned subsidiary, Aquamall
Water Solutions Ltd. registered a healthy growth of 16% in sales turnover and in
profit before tax of 10% inspite of higher depreciation charge of Rs.88.70 lakhs for
an intangible asset acquired by the Company.
During the year the Company expanded the installed capacity of cooler cum
purifier section at Bhimtal to avail the various fiscal incentives on this product also.
The Company also experienced an unfortunate fire accident at the Hyderabad unit.
Although there was no injury to any person, the stocks and infrastructure were
affected. The Company has filed an insurance claim for the losses suffered with
the concerned authorities.
The Company has set up another manufacturing plant at Baddi, Himachal
Pradesh. This unit commenced commercial operation on 29th April,2005. The
project was set up within a record time of three months and with minimum
investment. The project has been financed entirely out of the internal accruals of
the Company.
Forbes Aquamall Limited, a wholly owned subsidiary of Aquamall Water Solutions
Ltd. has reported encouraging results with a turnover of Rs.15.5 Crores and a
profit before tax of Rs.1.8 Crores. This has been possible with the concerted efforts
of the whole team in Forbes Aquamall. The unit has focused on delivering quality
products which has enabled it to stabilise operations and also obtain ISO and BIS
certification in a short time.
Your Company has made foray in international arena when its wholly owned
subsidiary, EuroForbes International Pte.Ltd., incorporated in Singapore on 20th
September 2004, commenced its operations. The Company's operation for the
period upto 31st March, 2005 has resulted in a net loss of Singapore $ 178627
(Rs.46.09 Lakhs). The Company, at present, caters to markets of Indonesia,
Philippines and Dubai, and has plans to expand its operations in other countries of
ASEAN and Gulf Regions. Your Directors are confident that the Company's
operations in the overseas markets will be as successful as in the domestic market
over a period of time.

7.

INSURANCE:
Assets of the Company have been adequately insured against usual risks.

8.

AUDITORS AND AUDIT REPORT :

You are requested to appoint Auditors for the current year, and to fix remuneration.
The retiring auditors, M/s. Batliboi & Purohit offer themselves for re-appointment.
For Eureka Forbes Limited

m c$*&ULQi
Company Secretary (

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For Eureka (Forbes Limited

Company Secrctar>
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE :

The information in accordance with the provisions of Section 217(1 )(e) of the
Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988, regarding conservation of energy, technology
absorption, and foreign exchange earnings and outgo is given in the Annexure hereto.
10.

PARTICULARS REGARDING EMPLOYEES :

A statement setting out the details of remuneration paid to the employees as required
under Section 217 (2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975 is attached hereto and forms part of this
Report.
11

DIRECTORS' RESPONSIBILITY STATEMENT :

Pursuant to Section 217(AA) of the Companies Act, 1956, the Directors, based on the
representations received from the Operating Management, confirm -

12.

(i)

that in the preparation of the annual accounts, the applicable accounting

standards have been followed and there are no material departures;

(ii)

that they have selected such accounting policies and applied them consistently
and made judgements and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company at the end of the
financial year and of the profit of the company for that period ;

(iii)

that they have taken proper and sufficient care to the best of their knowledge
and ability for the maintenance of adequate accounting records in accordance
with the provisions of this Act, for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;

(iv)

that they have prepared the annual accounts on a going concern basis.

APPRECIATION :
Employee relations continues to be harmonious and cordial. The Board of Directors
wishes to place on record its sincere appreciation of the devoted services made by
employees at all levels in ensuring the high levels of performance and growth that
your Company has achieved during the year.
Your Board would like to place on record its sincere appreciation for the assistance
given by the Company's Bankers and acknowledge that their continued support has
been a source of considerable strength.
On behalf of the Board of Directors

Mumbai, Dated :

,th

K.C.MEHRA
Vice Chairman

20 June,2005
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ANNEXURE TO DIRECTORS' REPORT

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming
part of the Directors' Report for the year ended 31st March, 2005.
A. CONSERVATION OF ENERGY
(a) Energy Conservation Measures taken : Nil
(b)

Additional investments and proposals, if any, being implemented for reduction of

consumption of energy:
None at present.

B. TECHNOLOGY ABSORPTION :
Efforts made in technology absorption in Form 'B1.
Form 'B'
Research and Development (R & D)
1. Specific areas in which R & D carried out by the Company :
The company's R&D Centre continues to be recognized by the Department of Science
and Industrial Research, Ministry of Science and Technology, Government of India. The
Water Laboratory at Bangalore is recognized by Karnataka State Pollution Control Board
and World Water Quality Association. The R&D Centre has been in close touch with the
customers, manufacturers and field sales force to evaluate the customer's needs and
product performance. The main focus has been on improving and upgrading the product
offering by accelerating product development.
The R&D has helped maintain the market leadership position through absorption of latest
technology in the areas of floor care products, water purifiers and domestic appliances.
The R&D Centre has contributed significantly towards value engineering and cost control
measures, at the same time maintaining value - benefit equation for the customers. The
R&D team also provides training to the field sales and service staff besides providing
constant updates on technology and new products to the field and Marketing division.
2. Benefits derived as a result of the above efforts :
R&D through its efforts has enabled the manufacturer to introduce on its own water
purifiers at the lower end of the market segment. R&D has also recommended improved
electronics, which is more stable and also automatically communicates to the service call
center if there is a service requirement.
R&D has, moreover, contributed to improve upon products and accessories like water
softeners, iron remover, pump models, resin based purifiers, etc to meet the different
requirements due to varying water condition in the market place
R&D has also tested and suggested improvements in imported products like Reverse
Osmosis, 3-in-1 Vacuum Cleaners, Five Stage Water Purifjeja^suit Indian conditions.
ireka forties Limited
)Q/;T^ZO
f Secretary

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Company introduced Ecofriendly household cleaning Liquids for sale through service
personnel.
3. Future Plan of Action
There are a number of products, process improvements and accessories, which are under
development in the field of water purifiers, vacuum cleaners, air purifiers, kitchen
appliances and eco-friendly chemical cleaning solutions. These products would be at
various price points to cater to different market segments.
R&D would continue to work on value engineering, cost optimization and re-engineering
to improve the overall operating efficiency.
R&D works closely with Business Development to introduce new products from the foreign
business associates and also for import substitution.
4. Expenditure on R & D :
a. Capital
b. Recurring
c. Total
d. Total R&D Expenditure
as percentage of total turnover

- Rs. 3.98 Lakhs

- Rs. 183.08 Lakhs
- Rs. 187.06 Lakhs
- 0.35%

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION :

1. Efforts, in brief, made towards technology absorption, adaptation and innovation.
In line with the rapidly changing technological environment, the R & D staff are provided
with the requisite means to keep abreast of the changes. They are also encouraged to
attend national and international technical symposiums and trade fairs to understand the
latest technology and adapt them to Indian conditions.
2. Benefits derived, as a result of the above: product improvement, cost reduction, product
development, import substitution, etc.
The results derived from the above efforts have contributed to significant improvement in
product quality and performance.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

Earnings in foreign exchange during the year under review were Rs.99,29,631/- and
the outgo Rs. 19,34,38,8037Cureka

H
Company

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STATEMENT UNDER SECTION 217(2^A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES
AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2005
SR,
NCX

DESIGNATION/NATURE OF DUTIES,
GROSS
NAME, AGE AND QUALIFICATIONS COMMENCEMENT OF EMPLOYMENT REMUNERATION
AND EXPERIENCE (YEARS)
RS.

PARTICULARS OF
LAST EMPLOYMENT

(A)

Particulars of employees employed throughout the financial year and who are in receipt of remuneration of not
less than Rs.24,00,000/- in terms of Section 217 (2A) (i):

MR. GOKLANEY S.L. (58)

B.Sc

Managing Director
02-03-1987(36)

MR. ICHHAPORIA J. N. (57)

B.Com., F.C.A

Sr.Vice President - Finance

11-02-1994(30)

39,72,849 Manager AccountsMafatlal Dyes & Chemicals Ltd.

MR. PALEKAR S K
M.Sc., MMS

Sr.Vice President - Marketting

27-07-1998(30)

33,61,726 Vice President - Marketting,

Sales and Services.
MIRC Electronics Ltd.

MR. SURESHAV (49)

B.E.( Hons). PGDM

Sr.Vice President - Operations

08-12-1988(25)

36,99,455 Materials Manager Facit Asia Ltd.

MR. VAIDYA MILIND (48)

Sr.Vice President - Strategy, Developmen

Exports & information Technology
05-04-2000 (24)

35,37,788 Commercial Manager

Nestle Icecream LLC, Dubai

(54)

B.Sc.(Chemistry)
(B)

1,04,91,778 General Sales Manager Johnson & Johnson Ltd.

There are no employees employed for part of the year who were in receipt of remuneration at the rate not less
than Rs. 2,00,0007- per month in terms of Section 217 (2A) (ii):

NOTES:
1
Nature of employment in all cases is contractual.
2

Remuneration as shown above include Salary, House Rent Allowance, Other Allowances, Commission, Company's Contribution to
Provident Fund, Superannuation Fund and Taxable Perquisites in respect of use of Company's Furniture, Leave Travel Concession,
Medical Reimbursement, etc.as applicable.

Other terms and conditions applicable as per Company's Rules/Schemes :(i) Company's contribution under Gratuity Scheme.
(ii) Medical Insurance or reimbursement of medical expenses.
(Hi) Personal Accident Insurance.

None of the above employees are related to any of the Directors of the Company.

There was no employee employed either throughout the financial year or part thereof who was in receipt of remuneration which in the
aggregate or as the case may be at a rate which in the aggregate was in excess of that drawn by the Managing Director and who held by
himself or atongwith his spouse or dependent children two percent of the Equity Shares of the Company.

For Eureka forces

V)0)V^ua
Cornfwoy Seer-Wry

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BATLBBOa & PUROH1T

Chartered Accountants
Telegrams : "ORGANISERS"
Telephone : 22077941 742
Fax :22074260
E-Mail :info@batliboipurohit.com

NATIONAL INSURANCE BUILDING

204, DADABHOY NAOROJI ROAD
FORT, MUMBAI-400 001.

AUDITORS' REPORT TO THE MEMBERS OF

EUREKA FORBES LIMITED
(1) We have audited the attached balance sheet of Eureka Forbes Limited as at 31st March
2005, the profit and loss account and the cash flow statement of the company for the year
ended on that date annexed thereto. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
(2) We conducted our audit in accordance with auditing standards generally accepted in
India. These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
(3) As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by
the Central Government of India in terms of sub-section (4A) of Section 227 of the
Companies Act, 1956, we enclose in the Annexure a statement on the matters specified
in Paragraphs 4 and 5 of the said Order.
(4) Further to our comments in the Annexure referred to above, we report that:
(a) We have obtained all the information and explanations, which to the best of our
knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the
Company so far as appears from our examination of such books of account.
(c)
(d)

(e)

(f)

The balance sheet, profit and loss account and cash flow statement dealt with by
this report are in agreement with the said books of account.
In our opinion, the balance sheet, profit and loss account and cash flow statement
dealt with by this report comply with the accounting standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956.
On the basis of written representations received from the directors of the Company
as on 31st March 2005 and taken on record by the Board of Directors, we report that
none of the directors is disqualified as on March 31, 2005 from being appointed as
a director in terms of clause (g) of sub-section (1) of section 274 of the Companies
Act, 1956.
In our opinion and to the best of our information and according to the explanations
given to us, the said accounts read together with significant accounting policies and
notes thereon, give the information required by the Companies Act, 1956, in the
manner so required and give a true and fair view, in conformity with the
Accounting Principles generally accepted in India:

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